In today’s economic climate we have witnessed changes in governments in the Middle East and many have wondered what the fallout will be in both our business budgets and personally at the gas pump. This is not about political, but more about adjusting your business. Back in May of 2008 we ran a post (Distributors consider ways to fuel surcharges) that explained that many distributors were looking at fuel surcharges.
We also conducted a survey and many responded that they were adjusting their delivery policies. Many dropped those policy changes when the price of fuel dropped.
What is currently happening with regime changes affecting the perceived world oil supply is provoking some to wonder how they can stay ahead of increased demand for oil and what seems to be an overnight run up in prices at the pump. So when we saw this article in the Dallas Morning News, it generated some thoughts : Fallout from uprisings 3.7.11
We thought there might be some misconceptions we would share with you:
A barrel of oil is 42 US Gallons (many still think it is 55 gallons).
It cost roughly $1.00 to refine that barrel in bulk quantities.
Taxes and transportation are layered in on top of that. To see what each state adds to the retail cost of fuel: American Petroleum Institute….Federal, State and local taxes.
The US has an abundance of Natural Gas as described in Wall Street Journal on 3.7.11 with their article: “Shale Lifts Prospects in Ohio”
Even though Natural gas is very low in cost currently, it doesn’t affect our transportation systems right now.
So what is one to do?
With the price of gas swiftly rising, how are you recouping your increasing delivery costs? Are you considering re-instituting a surcharge? Do you have one? Are you limiting delivery areas? Are you adding a little something to price increases to recoup higher fuel? Are you restricting some services to selected customers (i.e. after hours services)? Requiring a minimum order size for deliveries? Or are you just absorbing the cost and reducing your profit?
At what price per gallon will you consider too painful and need to make delivery policy changes?
3 Comments
we’ve started thinking about it but am waiting to see what others do as we don’t want to be at a disadvantage
UUUUUgggggghhhhh. Here we go again.
I wish as a nation we could reach some sort of energy policy where we use our resources.
We are going to ease into it with certain types of customers.
Another thing we have seen recently, is that more of a certain type of customer is ordering on our web site the day before.
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